Yup, ours are going up about the same. It is a bummer, but I am lucky it's not going to ruin me. Just wish it were going to infrastructure, medical care for all or paying down debt.

Yes, ours will also go up. Like most dual-income recent homeowners in Palo Alto, our yearly CA taxes + property taxes are well above $10,000. OTOH our tax bracket will go down slightly, so we won't take as much of a hit as would otherwise have been the case. Depending on your income, your bracket may also have decreased. Check the 2nd page of the link here: Web Link

@Anyone Else "Suddenly, without warning" - the tax changes are for 2018, so you have a one year warning.

@ours too,
I am pretty sure the loss of tens of thousands in deductions puts us in a higher bracket and the lowered percentage isn't enough to offset that, thus our entire income is subject to a higher rate. But we have to plan.

@John Alderman ,
When you are living on this thin of a margin, there is no way to delay the choices until next year, unfortunately. This affects decisions such as whether we will have to move, how that would happen in a way that wouldn't mean the end of my productive life, whether we could do things now to delay that. etc. Moving has all kinds of financial consequences requiring accurate information. Is it more fruitful to try to weather things a few years until spouse can retire rather than forever lose the full retirement. For example, my parents can help some, almost cover our second mortgage for awhile, although it will not make up for the increase in our taxes. Could we borrow from retirement to cover the taxes to pay in advance this year to reduce some of the burden next year,etc.

How is this going to affect the taxes that go to the state versus the federal government? Why is the media so mum of these issues?

Looks like it hurts us, too. Hurts a lot, while billionaires make tens of millions. And their trust fund kids make hundreds of millions with no estate tax. Our tax guy is swamped with calls, and he's trying to figure it out as the IRS puts pieces into place.

No public hearings on this plan. They had so many handwritten entries and scratch-outs on the original bill, as the lobbyists all got their pet projects in for their donors.

How many GOP congressmen from CA voted for this? Ten? Are they like Corker - where they benefitted personally, as well as their donors?

This summer, I'll be talking to friends in those SoCal and Valley GOP districts - make sure they get facts about this. Maybe a road trip or two. Primary time.

Whatever we pay for this, those 'yes' votes will pay at least as much. Some will retire to K street; I'll make sure their anointed successors hear me and my friends. What ever happened to the party of fiscal responsibility? of fiscal conservatism?

I'm done being silent. This comes out of our pocketbook.

The new tax bill makes the SALT deduction for a married couple who file either separately or together the same ($10,000) as that of a single person. Hence, for Bay Area couples who have similar incomes and own a home, it makes a great deal of sense to get divorced (at least on paper) or not marry in the first place.

Time to demand that our local and state taxes be lowered...NOW!

@Original poster - If an increase in cost of ~1000 a month forces you out of a multi million dollar house, it is a good reality check for you: sell the house now. You overextended.

@Nancy,
With all due respect, that's not going to help those of us who have been suddenly hit by this. Since we live in a high-cost area (supply and demand), salaries are already higher so people are already paying a greater federal tax for the salaries. States have higher costs to provide the same level of services for things like infrastructure, disasters, etc.

Demanding the states fix this by themselves being upended when this was essentially an instantaneous power and money shift to the federal government (and the ultra-wealthy) against specific local areas is unhelpful. Disallowing ordinary people to deduct their local and property taxes and thus pay tax twice on the same money, while still allowing real estate speculators to continue deducting all of their expenses and otherwise advantaging them in the law is destabilizing of our communities. Most ordinary people in the country aren't going to understand the advantage to certain real estate interests in high-cost areas, and the money there is to be made on the backs of ordinary people, but 45 does. The beauty of it (from their standpoint) is that using the federal government for business advantage is never going to result in anyone being held to account for what happens to any given ordinary person who loses their homes in the process. Since most media outlets cannot understand the housing cost dynamic here like the local media can, I just think it should be something of a concern.

@john_alderman,
We are overextended, that's the point. But you are ignoring the specifics of housing in this area if you think that moving is a financially beneficial option, especially in relationship to health issues that make moving difficult and expensive. People get into homeownership for the stability and predictability of costs, and because eventually it does get easier. There is no way to stay here as a renter. There is also usually no way to move again, because of the tax basis. Your post is an example of why the administration can get away with doing this to millions of ordinary Californians -- because it is so hard to understand the circumstances and what people to do create stability and keep their careers and communities here.

But there is no way to have predicted such an abrupt and life-changing disruption. This is the kind of sudden turning our lives upsidedown and taking everything using the power of the government that the Fourth Amendment was supposed to protect ordinary citizens against.

It's certainly hard not to sympathize on an individual level with someone who's sacrificed and "overextended" to buy an expensive house in an expensive area. If you're on the financial edge already, it must be terrifying.

One of the reasons politicians have been able to raise taxes to the extent they have in California has been the fact that they're deductible from federal income for 100 years or so. A "tax ecosystem" has grown up around this long standing system. It's no wonder there are big dislocations when it's altered by the removal of the tax deduction.

But just because something has been around a while doesn't make it right or sensible. Putatively, taxpayers get something of value for the state and local taxes they pay: enhanced services compared to lower tax states and locations. So looked at it this way, the original poster here chose to spend money on something he/she values: government services (maybe in the form of a good school system).

But most other expenditures by taxpayers aren't tax deductible. If Original Poster had chosen to live in New Hampshire and spend the extra money in his/her pocket on private schools, there would be no deduction. From the viewpoint of a New Hampshire voter, this might look unfair.

I sympathize with those paying federal taxes because of this tax bill (I'm one of them, though I don't think I'll be forced out of my house.) But I'm not sure it's a bad change. In the long run, it might force California politicians to be less profligate with our tax money.

The new tax law grants extraordinary tax reduction opportunities to pass-through real estate investment entities, like the Trump Organization. All of us wanting tax breaks should find ways to structure our own real estate holdings, including our homes, to mirror the Trump family model so we too can benefit from this remarkable coincidence.

"In the long run, it might force California politicians to be less profligate with our tax money."

Wow.

Politicians in Washington give the vast bulk of this trillion plus dollars to billionaire donors, banks, fund managers and corporations instead of average working Americans, who work every day with fiscal challenges in EVERY state, and you push it into the laps of local politicians? I'm no fan of Jerry Brown, but c'mon. Whataboutism much?


This wasn't what we were promised. “Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected. They can call me all they want. It’s not going to help. I’m doing the right thing, and it’s not good for me. Believe me.”


Oh, they called him, alrightty...

@mary - "It's certainly hard not to sympathize "

The problems of the super-wealthy and their multi million dollar homes and their lost government subsidy?

@Original poster - if your taxes are really going up $15,000 dollars, in spite of tax rates dropping, it means you spent multiple millions of dollars on a house, and are making multiple hundreds of thousands of dollars a year. To act like you don't have options when people are getting evicted from the cars they are living in is a little gross. Again, if you can afford a multimillion dollar home in Palo Alto, but can't afford $200 consultation with a tax accountant, then you are doing something wrong, or are misunderstanding your own financial situation and the tax law.

Fiscal Conservative is addressing an argument no one has made. You can tax all those "billionaire donors, banks, fund managers and corporations" at 100% or 0%, and you still have the issue of whether state and local taxes should be deductible from income for federal taxes. One way to state this is to ask whether taxpayers who choose to consume a high level of state and local government services with their higher taxes should be taxed at a lower rate than taxpayers with the same income who choose to spend their income in other ways than on government services. It's easy for us to live around here who are likely to be affected to see it through the eyes of people who live in places with lower levels of government services and taxes.

Again, I sympathize with Original Poster. The abrupt nature of the change will be very disruptive to many people's lives and perhaps there should have been some phase-in to account for this. But I'm not sure it's a bad policy in the long run.

And no one is putting anything into the laps of state politicians that doesn't belong there. No doubt that the new tax law will be putting pressure on high tax state politicians to be more sensitive to ever rising taxes since their voters are very concerned about it. (New Jersey politicians already are talking about holding back on a proposed "millionaire tax" because of the federal tax bill.) You may think this is a good thing, or a bad thing...but it is a real thing.

@mary - "fiscal conservative" family's argument seems to be raise taxes on the billionaires so we millionaires can't get more welfare? There seems to be no self-awareness there that we are the 1%.

How do you get wants to "raise taxes on the billionaires" from Trump's promise: "our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected"?

. . . . will protect low-income and middle-income households, **not the wealthy**

Ridiculous hyperbole from aldermen. This law protects billionaires and multiple generations of their offspring while we debate which Palo Alto working families get hurt, and by how much, and which get some crumbs.

As to "we are the 1%": Did you make $1.2 million in 2014? Maybe only a million that year?

"According to statistical data from the IRS, the top 1% had an adjusted gross income of $465,626 or higher for the 2014 tax year. The Washington Center for Equitable Growth put the average household income for this group at $1,260,508 for 2014."

@Fake Fiscal Conservative Family - "how do you get wants to "raise taxes on the billionaires". I get it from your complaints that as a rich 1 percenter in Palo Alto, you still aren't satisfied, and want your taxes cut, and want someone else to pay for it. Class envy still rules, even at the top. Just for your own happiness, take a step back and try to have some perspective on your level of privilege. An income of $100k will put you in the top 1% worldwide. That you feel badly about being rich in Palo Alto says something about Palo Alto.

@John_alderman,
"@Original poster - if your taxes are really going up $15,000 dollars, in spite of tax rates dropping, it means you spent multiple millions of dollars on a house, and are making multiple hundreds of thousands of dollars a year."

This is wrong on both counts. We are not making hundreds of thousands a year, nor are we in the 1% or even close. No, we are not living in our car, but that does not mean this change will not be devastating to our lives. Someone could have bought a house for around a million ten years ago and would be paying around $20,000 in property taxes. Assuming the $10,000 limit is taken by state taxes, that's $20,000 less deduction. Other changes add more. If this bumps the family into the next tax bracket, it's easily possible that a teacher living in Palo Alto in an ordinary home could see $10,000 to $15,000 increase in their taxes. As prices keep going up, it means moving even to a much cheaper area is actually more expensive because of property taxes, and now more so. It's not the usual marketplace.

What we live on after taxes, medical, and housing, is about $15-$40k a year for a family with children, for everything else, depending on what happens that year. We would be in a much different better financial situation if consumer laws and enforcing contracts wasn't such a joke in our society, but that's a different issue and not a public one. Ordinary people buy homes despite the difficulties because of the stability and investment - renting leaves people too vulnerable to constant disruption, expensive/unpredictable moving, and inability to plan their finances. Typically, the way to create financial stability is to buy, despite initial difficulties. The equity is many people's only retirement savings, and if something happens to bump someone who made the sacrifices early, it is also life altering.

This is not something we could have predicted a year ago, and we simply cannot afford a real increase in our taxes that amounts to a significant percentage of what we actually live on.


@Mary,
An abrupt policy change like this that has such serious implications to millions of families should have been debated and refined. Investment groups that buy up homes will still get the deduct those costs, but individual families whose home is often their only major investment especially in this area will not.


John Alderman, with all due respect, you clearly are someone not affected by this and want to talk about issues I have expressly asked you to start a different thread over if you want to discuss them. Thanks. I would really appreciate hearing from other families affected, and asking if anyone in the community will help on the account front. I debate whether to spend $15 on a haircut every four months, we have no funds for accountants who cost hundreds an hour -- I was just hoping there might be large firms willing to help their neighbors stay in their homes if their taxes go up like ours will.

"I *get it* from your complaints that as a rich 1 percenter in Palo Alto, you still aren't satisfied, and want your taxes cut, and want someone else to pay for it."

aldermen - Now you are just lying. Or you just "get it" wrong. Or both.

Allow me to repeat - the "1%" had a gross income of $1.2M in 2014. I did not. Did you?

I didn't say I wanted my taxes cut - I said Trump promised to cut taxes on working Americans and raise taxes on billionaires.

He didn't. He did the exact opposite.

And you say I feel badly for being rich in PA, simply because I'm pointing out that Trump lied: he gave billions to the 1% while we debate who in Palo Alto was harmed by his tax increases on working Americans.

Anything else that you would like to misread or lie about?

@Original Poster - Anyone Else - If you are in a million dollar house you bought 10 years ago, first of all, congrats, you've become a multi-millionaire just on that investment. Second, you aren't paying 20k a year in property taxes, you'd be paying closer to 12k at most. Third, if you aren't making hundreds of thousands a year, your taxes aren't going up >$10k a year. Your number just don't add up. [Portion removed.]

Original Poster,

It hurts. And it sounds like it will hurt your family more than others. I doubt, though, you will get pro bono help. Palo Alto homeowners don't get a lot of sympathy. I say that with sympathy as someone who is getting the hit, too.

>> Allow me to repeat - the "1%" had a gross income of $1.2M in 2014.

Maybe the average 1%er, but the lowest 1%er was $465K (2014 data).
$465K puts you at the sad bottom of the 1%.
I assume that is Adjusted Gross Income.
One's change in net worth can be a very different number.

The numbers as presented don’t add up.

10000 of additional tax means roughly a loss of 30000 in deductions which means a 40000 property tax bill.

There is no change in property tax deduction at the state level.

On another topic, the almost doubled standard deduction does indeed help middle and lower incomes. In many cases with much more impact than you will experience.

Someone who bought 10 years ago around here made a killing.

@ Mom,
Good luck to you and your family. Thanks for posting.

@John Alderman,
Look, I get that your situation is really detached from ours. I get that you think people who own a home here must be rolling in dough. Read the story on families who are "house poor" and please remember that not everyone is you. After what has just happened, I do not appreciate being attacked like this.

"If you are in a million dollar house you bought 10 years ago, first of all, congrats, you've become a multi-millionaire just on that investment. Second, you aren't paying 20k a year in property taxes, you'd be paying closer to 12k at most. Third, if you aren't making hundreds of thousands a year, your taxes aren't going up >$10k a year. Your number just don't add up. "

The numbers don't add up because you are manipulating them dishonestly to make them not add up. The situation I described was not far from ours. If you bought a home a little over ten years ago for close to a million, with 2% annual increases and special assessments, your property taxes are indeed closer to $20,000 than the $12,000 you want them to say they are. Secondly, if a family has ha large mortgage and has had to take equity out of their home over the years to stay afloat, and there are other debts to stay afloat, no, they are not millionaires. The thought of losing the only major investment that is likely to hold its value, while also having to take early retirement, is terrifying, when major medical looms far short of old age. I watched an in-law retire to a really cheap part of the country with more and that person ended up destitute and on Medicaid. A million dollars (and it's not a million dollars after debts and taxes are paid) is $33k annually over 30 years, not even going to cover the unreimbursed medical costs many of those years or make up for the loss in income after retirement.

Look, I'm not going to get sucked anymore into this anymore, this has gotten way too personal. It's already clear that you will find a way not to believe me no matter what the facts, and that the rich members of Congress do not understand the circumstances of ordinary Californians and New Yorkers. If you do not wish to understand them, fine, but please stop with calling me a liar,I am the kind of person who goes back and pays if my purchase was underrung. If the moderators wish to talk to "house poor" to verify that I am providing real scenarios, that is part of what I am asking, that the local newspaper please try to understand the impact on people in this situation. They are trying to do a story on the middle class, after all.

Lastly, since you have made the charge that people in the middle are on "welfare" by asking that they get to deduct the major costs on their main investment the way rich investors still can, I would like to point out that every rich person in this country had to rely on significant public investments that no one person or group could pay to create: a stable nation through a history of military and diplomatic investments, roads, ports, and airports (that the rich use disproportionately for their own gain), cities' infrastructure, sanitation, communications, postal, and other infrastructure necessary to maintain a first-world economy, a fair and functioning judicial system, patent protections, the education infrastructure and education of the workers, a public health system, science and health research investments, and other public investments like the arpanet/internet that are essentially gifted back to the public and benefit commerce, etc etc etc.

No rich person could invest in creating all those things in order to engage in the work that makes them rich. The creation and maintenance of that wealth disproportionately relies on those public investments. Why should the public investments ordinary people need, such as a baseline health coverage, education, social security they paid for, etc, be considered "welfare"? Why shouldn't the wealthy pay back in kind after they make their wealth for the investments they could never have made for any interest rate or amount of time in their lives prior to becoming wealthy? There is a reason people aren't flocking to Somalia and Syria to make their fortunes.

General Eisenhower believed in the necessity of infrastructure for national security and did not believe in deficit spending, and the wealthy at the time knew it was their patriotic duty to support the nation in the proportion to which they had themselves benefited (since the poor generally fight and die disproportionately in wars, it's hard to put a price on that).

There was a time when the highest tax rates did need to be cut. But that time is not now. (For the record, I am actually in favor of a graduated flat tax, 5%, 10%, 15%, and 20%, on all income, that's it. Remember the postcard we were promised?)

Now please, can we get back to the issue at hand, which is not being talked about or even looked at in the media, which is MIDDLE CLASS Californians who are being slammed by this tax?

@Orginal poster - [Portion removed.] Being house poor in Palo Alto is choice you made that you can fix. Middle class Californians aren't being slammed because they don't own multi million dollar homes. [Portion removed.]

Nancy Pelosi and Dianne are some of the richest women in the state and congress. The other people in the state are also very rich. There is a listing from Forbes that ranks the richest and Trump is not on the list. So please quit talking about Trump - he is not even taking a salary for his job. As to what I have done is pay my property taxes this year, and instruct a higher California State Tax on my MRD payments. Hopefully I will have paid in enough that I will get a refund next year.
The next project is to start looking at the way California is spending our money - certainly not on infrastructure. People at all levels of the state need to get into how our money is spent and look for ways the duplication of services is eliminated.

@john_alderman,
My numbers are correct because they are grounded in reality, yours are based on your pernicious wishful thinking.

Being house poor in the Bay Area may have been a choice, just like having a job and eating are a choice, but it is not something easily "fixed". There are many consequences to losing a home now, and I'm not even going to bother arguing them with you since you aren't engaging in this conversation in good faith. I will say that buying a home in the Bay Area was a choice because the alternatives were worse. Buying in Palo Alto was just what happened as we were trying to find anything between Santa Clara and San Carlos. At the time, we weren't even looking here.

No, I am not trying to make a political point. You are. Please take the political discussion to another thread. Please. You have made your point, and insulted me in all manner of indefensible ways, and I am asking you now to take your nasty political attacks to another thread.

@Weekly,
Please consider looking into this issue NOW, and getting some accountants to help offer advice, meaning, let us all know things like:
1) what counties offer transfer of property tax basis, and under what circumstances (only once? after a certain age? anytime if after a certain age? only after a disaster? etc)
2) are there any bookkeeping things ordinary people can do to become a real estate investment interest and then continue to deduct the full property taxes etc?
3) what exactly are the tax consequences to selling a home now?
4) can people avoid taxation by investing any proceeds in another home?
5) Does borrowing the money to pay the next property tax installment make financial sense?
6) Can one prepay state taxes?
7) How does one put in for more state tax exemptions so that we have use of our money throughout the year? Schwarzenegger made a change so the state would have more money up front when the state was in bad straits, but it's time to reverse that.
8) are there any other developments in the new tax that would allow ordinary people to offset the loss of property tax and state and local tax deductibility?
9) is there a software program out yet that has the new tax in it so that we can know whether we should do things now to reduce overall taxes?
10) Are there other ways besides retirement loans (for which we don't have the cash flow) to raise the capital to offset this increase in costs, such as basically selling some of the equity in our home to family members?
11) what about AirBnB - is it illegal for people in their own homes?

John Alderman is right - you won't find many people in the Bay Area who feel sorry for you if you can afford to be a homeowner in Palo Alto. And you likely won't find any people at all in the rest of the country who consider you anything but very, very fortunate. So whether your description of your tax plight is exaggerated or not, it's pretty much up to you to deal with it.

One option would be to take your (likely after the 10 years you say you've owned your house) 100% profit by selling your house and moving to somewhere where the price of government isn't so high. (And you're right: you'll owe a big capital gains tax. Think that somebody in Des Moines whose house is still under water from the financial crisis feels bad for you?)

Think you're going to get salvation from a hoped-for Democratic takeover and consequent middle class friendly tax change? Think again. Nobody in the rest of the country thinks that ANYBODY who can afford a house in Palo Alto is Middle Class. And that includes especially Democrats. What do you think will happen if Bernie is elected in 2020?

As I said, I have sympathy for you if you have to uproot your life because of a sudden tax change...but in the great scheme of things, you're very very fortunate. (Ask a Syrian refugee.)

Deal with your 1% style problems and count yourself very lucky. Because you are.

When I said soak the rich, I didn't mean ME!!!

Original poster - Anyone Else... --

Practical advice:

1. If you have a trusted tax accountant, by all means, contact that person. But keep your expectations in check. Even professionals will need some time to figure out the implications of the new law, much less the specifics of your personal situation. And, of course, accountants, like many others, are taking time off during the holiday season.

2. There are things you can do by the end of the year to lower your 2018 tax bill. The basic rule is to maximize deductions for your 2017 taxes (before the deductions are capped or eliminated) and defer income for your 2018 taxes (when the income will be taxed at a lower rate).

One example of maximizing deductions for 2017 would be to pay the second installment of your property tax before the end of this year. The installment isn't due until February 2018, but if you pay it now, you can deduct the full amount from your 2017 taxes, where you would be unlikely to deduct the full amount from your 2018 taxes because of the new cap. See Web Link

One examples of deferring income would be to lower investment income by waiting until 2018 to sell any stocks which have appreciated in value. Another example would be to ask your boss to defer your year-end bonus until 2018. You can search the web for other things you can do. Many financial and news sites have published articles targeted the new tax law.

Everyone can sympathize with someone’s medical expenses throwing around their financial situation, and understand how that can stress other parts of their budget beyond the breaking point.

I wish health care reform would deliver on the promise to address that.

Regarding my previous post:

I am not an accountant or a tax specialist. I should not have used the phrase "Practical Advice". I should have used a phrase like "Ideas to Consider". Obviously, you should do your own research and make your own decisions. I will not be held responsible for actions you or anyone else might take based on my posts to this forum.

I agree with the Original Poster, this is going to be hard on many folks here, and tough decisions will need to be made. I don't have any advice, though. (For us, prepaying SALT taxes would push us into AMT in 2017 so the deduction isn't worth anything in 2017 anyway.) I expect it will make home ownership less appealing, and I expect sales prices will go down. It would be nice if the state can find a way to alter local taxes in a way that reduces the federal tax burden, but not clear to me what that would look like, and I would expect federal lawsuits since CA is such a big income generator for the US government. It galls me that all this extra money is going to increase our debt and increase the wealth gap. Elections matter.

@I Sympathize - "It would be nice if the state can find a way to alter local taxes in a way that reduces the federal tax burden"

They can do one thing, lower them. As for lawsuits, good luck with that. You could try joining the "income taxes are illegal crowd".

Web Link

Mr. Alderman, several ideas are being discussed that involve altering the structure of SALT taxes, rather than lowering them. The "lawsuit" comment I wrote refers to lawsuits by the federal government if CA does anything too tricky. From your comment, that wasn't clear to you.

That said, this is not the main point of this thread. Many folks around here are going to have a difficult time with a $10K cap on the SALT deduction, without easy fixes.

@I sympathize - If by difficult, you mean it hurts to give up a free ride, I agree. If by difficult, you mean unable to comply, then I don't think so.

[Portion removed.]

If someone in the Midwest has a retirement savings, as my parents of modest income do, even if their home is underwater (as is also the case), they may be better off financially over all than we are. Because of medical expenses and separately the sorry state of enforce-ability of consumer laws, we are less well off overall. My retirement savings is my home. My future is the stability of my home. You must be very lucky that you can pick up and move and you think that is nothing. For some people, under circumstances, that's really the end of productive life. (One researcher on aging told me once "you move old people, they die". That's a generalization of the research, but the vulnerabilities in some cases are the underlying reason.) Again, the personal side of this is not your business, especially since your only contribution is to lob insults. But you do highlight why the Republicans did this -- and the tightrope the "house poor" in this area walk. I do hope the Weekly will take another look at the issue in light of what just happened. It's horrible for kids to be suddenly taken away from everything they know, with parents who are this stressed. Thanks for a horribly stressful Christmas, Republicans. I will not forget at the ballot box, and neither will my southern relatives.

@Abitarian,
Thank you for the helpful comments.

@I Sympathize,
Thank you also. Can you tell me about AMT? Is there an income threshold or is it if your taxes go below a certain percentage of your income? I have never had to deal with it, but I want to be sure if we borrow to prepay 2018 property tax, that we won't be causing the same issue. We are in a 12 or 15% tax bracket as of 2015.

There's a good summary of the 2017 AMT rules here: Web Link

You knowingly stepped into the housepoor situation, banking on real estate appreciation and it was a gamble. It’s never good to be housepoor although many Palo Altans are. Surely, your house has appreciated some and you can move elsewhere and will realize that Palo Alto isn’t all that. It’s more important to start saving while young. Tutors, overnight camps, extracurriculars are helpful for your children. College tuition is around the corner. This is no time to be housepoor. Raise your children right. Your pride might take a hit but there is good life beyond Palo Alto.

"...please quit talking about Trump - he is not even taking a salary for his job."

Yup--Trump says he ain't on the public servant payroll. If he's telling the truth, it means he ain't working for We The People Of The United States. Why are you so thrilled about that?

OP said "Our taxes will go up by $10,000 to $15,000 or more." I think you meant to write that your taxable income will increase by $10,000 to $15,000 or more. If so, this will not necessarily lead to a significant increase in taxes due to the reduced tax rates. Talk to your accountant before making any rash decisions.

A few comments in response to Mr. Alderman
(1) The states hit hardest by the 10K limit to the SALT deduction are also ones that some of the highest net contributions to the federal coffers - a general discussion of this issue can be found in Web Link
(2) The notion of "principle" with respect to the fairness of federal deductibility of SALT might be seen as reasonable were if not for the facts that (a) like several other aspects of the new tax code, it is primarily aimed at states that voted strongly against Trump, and institutions (elite private universities) that are perceived to be hostile to Republican policies; (b) a number of existing egregious tax breaks (e.g. mortgage deduction for a second home, carried interest, etc.) were retained; and (c)fnew egregious tax breaks were created, e.g., the deductibility of the first 20% of income derived from pass-through businesses like the real estate enterprises of Trump and of Bob Corker, whose vote this change evidently secured.
So if the tax code would have been actually cleaned up in the interest of fairness and increasing the competitiveness of American businesses (a legitimate goal), I would agree with you that the grumping about loss of the SALT deduction would appear unseemly. However, given that the tax bill was crafted in secret with no real debate and no attempt at securing bipartisan support, was clearly aimed at punishing those who do not support Trump and the GOP, and corruptly rewards the wealthy donors to Trump and GOP, I think it is entirely reasonable to express one's dismay at what may well prove to be a tax increase despite what the President and his minions might state publicly.

I second doing some intensive number crunching before making any decisions.

The tax changes favor corporate entities. If, for example, you were to create a pass-through real estate corporation that owned the house, and rented it out, then all of the state and local taxes are deductible as a business expense, as well as mortgage interest. What income is left can get a nice break as a pass-through. You might not make a lot of profit from it, but the house should be self-supporting at that point so that you can retain your equity over the next few years.

That means, of course, renting something inexpensive to live in while finances stabilize.

And the prop 13 transfer is a once per lifetime deal, only for certain counties, and only if over 55. Again, crunch some numbers to see what the actual benefit would be.

The fact that not all inefficiencies in the tax code were eliminated and the fact that some more inefficiencies were added does not mean that the elimination of the SALT deduction is bad policy. Neither does the fact that it hits hardest at voters who did not support the winning side in the election.

Both sides do this. Do you think the people in West Virginia were happy with Obama's coal punishing environmental policies? Do you think religious people were pleased with Obamacare's contraception mandates or the administration's gay rights policies? Do you think the average taxpayer was happy when the Obama administration gave big grants to his donors at Solyndra?

The biggest tax inefficiencies aren't the ones the Republicans put in to benefit their cronies. They're Employer Provided Health Insurance exclusion from income, and the mortgage interest deduction. We'd all be better off if both sides could agree to eliminate all these carve outs and broaden the base of taxable income. Don't look for that any time soon - no matter which party is in power.

Mary: Both parties do not operate in the same way. Policies that the Democrats enacted were done so after vigorous public debate, not behind closed doors in response to the oligarchic donors' requests.
As to your other points:
(1) Coal is a very environmentally destructive way to generate energy, both locally (which affects the people who mine it) and, more globally through coal combustion has on climate (oh let me guess, you are part of the scientifically illiterate Fox News audience who do not think mankind is changing our climate). However, the reason coal is on the way out is not federal policy, it is the fact that natural gas is cheaper, and renewable energy is getting cheaper by the day.
(2) Religion per our founding is a personal matter - if (so-called) religious people don't like contraception, then it is their right not to use it. I have hard time seeing how gay rights is a religious issue - recall that EXACTLY the same arguments were made in support of slavery, segregation and anti-miscengenation laws. So if you don't think gay people should marry, don't marry a person of the same sex as yourself. These principles would seem, as our Founders describe it, "self-evident".
(3) I agree that the fact that medical insurance is pre-tax is no doubt an entitlement - how about we go for single-payer, so that this issue would go away? In any case, it would be interesting to see how this is structured? I note that unlike much of the new tax code, Ivanka Trump receives roughly the same benefit from this as does say the lowest paid 100% employee at Stanford, so it is a very egalitarian entitlement, unlike say the exclusion of foreign income from taxable income (cost in 2018 estimated to be $112B).

@ Stephen - I'm surprised anyone would claim the deductibility of the first 20% of income for pass through businesses is an egregious giveaway. It was driven almost entirely by Ron Johnson of Wisconsin (not Corker or Trump), and it was intended to help small businesses by giving them something comparable to what the big C corps were getting with the rate cut. It is one of the few unequivocally good things for the little guy in the flawed bill.

There should have been debate and cooperation with Democrats, but Nancy Pelosi and Chuck Schumer believe it is better politically to avoid all cooperation, and even discussion, literally failing to show up at meetings at the White House. I agree that the rich are UNDER taxed, not over taxed. That's why I find it galling that people with multi million dollar homes in Palo Alto are complaining about fairness. Some small construction worker renting in Modesto is paying taxes to subsidize the mortgage and property tax of a millionaire in Palo Alto. That's a distortion that no one should accept, regardless of party affiliation. It is also a factor in the unaffordability of housing.

I probably agree with Stephen on most of his political positions, but I'm not naive enough to think that everybody else sees things the same way, or that just because I think it's obviously correct, others don't disagree. (Trump is president afterall even if neither Stephen nor I voted for him.)

Both sides reward their voters, and both sides think those on the other side are motivated by perfidious partisanship. The things Stephen says about the processes used by Republicans to pass the tax bill are EXACTLY what Republicans said about the passage of Obamacare.

Stephen can come up with rational justifications for policies of the Obama administration that sound neutral to him, while criticizing policies of the Republicans as unfair and partisan. Maybe he should watch a little Fox News so he can see how his opponents think. "My side is always right and yours is always wrong" is primarily what ails the country's politics right now. Maybe our side - if we're really more intelligent, rational and moral - should take the lead in trying to understand what the other side is saying.

"The states hit hardest by the 10K limit to the SALT deduction are also ones that some of the highest net contributions to the federal coffers"

It's an old story: welfare for the backward Red States from the bounty of the advanced Blue States.

[Post removed.]

[Post removed.]

Most countries have gotten rid of the mortgage deduction. But I believe they phased it out, which would have been the right thing to do. In fact, I would bet the Democrats (generally, but not in NYC and CA) would support getting rid of this deduction that generally helps richer people. Even cutting the deduction by 100%.

However, not deducting being able to deduct state taxes will hurt Palo Alto. I am already making my donations right now, planning on no donations in 2017, and I am not that much of a scrooge, just a planner (I will bunch my larger donations every other year, so every other year I donate my bigger donations in Jan and Dec of that year). That isn't going to help nonprofits. I have very large expenses coming up and will have to do that. And that is sad. And, it is sad to say this will definitely hurt PIE : (

With the standard deduction increasing, I think all deductions were eventually be cut because so few of the country will benefit (even if a majority of Palo Altans would).

I love all of these "talking points". Note that your governor is privately in business with the individual who manages the Oakland Port redevelopment. They had a plan to mine coal in Utah and bring it down to the Oakland shipping terminal by RR through the mountains. A great deal of public outcry shut down this activity. You can google the coal at Oakland port to verify. Some expert at SU thought that was a great idea - who paid him? That is a similar plan in which coal would be transported by barge down the Columbia River by an Australian company to the coast to be shipped to China. Note that China has more coal than it needs and is selling it to North Korea. The next hurdle is the oil trains that would go through Silicon Valley to SLO for processing. How about a ship instead?
Bottom line is that our state is poorly managed and fiscally irresponsible and you keep trying to blame a person who has been in office for less than 1 year. Time to focus on our maintenance issue regarding dams - noted in the paper today, Next is to bring this discussion down to our city that has two vice managers - not voted on by the taxpayers, and rediculous expenditures on ruination of roads like the Ross Road project. Get real "blue state" - you are spending money on anything but what matters within the criteria of roles and responsibilites.

Of course people love to blame Trump for everything. He did have to make major concessions to get the stubborn Republicans in Congress and the Senate to agree on anything, so the final product may be better than what we have but is very compromised.

I can't help but feel like CA/Palo Alto kind of deserves this. Depends on your political perspective I guess. But the Silicone Valley bubble is starting to burst.

California "Values" that increase the cost of your taxes both at the federal and state level. Check out the "Values": Mexico City is the biggest city in North America and if you check out the "tourist" amenities has huge hotels, concert halls, museums, etc. Mexico has elaborate resorts on the Pacific Coast and the Gulf. Mexico also has universities. Yet every op-ed depicts some poor young person in a tiny town who imagines they will become great if the can go to the US - in the SFC today. Common sense says that if you are a resident of Mexico then you go to a higher population city that has a tourist element that requires much labor to maintain. That includes musicians and entertainment people at hotels and resorts. Why the op-ed? Because churches and organizations have a budget assigned to "missionary work" that gets supplemented by federal funding. And once the people get here the church or organization has to provide housing, food and a job. That produces the "compassion" comments.
The person would have been better off if they went to university in Mexico and got a job in one of the larger cities to supplement their education. And they would be close to their families. Yet you all keep building some fiction that there is no path to a major city in Mexico where a citizen of Mexico can get health care. World history - California was colonized by Spain - they were here before we were. They have always had the big picture.

One thing I'm sure we can all agree on is that this tax change will make it even more difficult to purchase housing in Palo Alto.

Circumstances change, and it is quite possible that the original poster made a responsible decision at the time of purchasing the home, and is simply, if somewhat, desperately, trying to hold on to the home while riding out a rough patch.

In any event, it is not my place to judge, and I feel discouraged, though not a bit surprised, by other posters who presume to do so.

The original poster is only soliciting advise for minimizing his or her tax burden. Surely, this is something most, if not all, people wish to do. Donald Trump himself said that not paying taxes "makes me smart".

For many regions across the nation, the ability to purchase a million dollar home is, by definition, a sign of great wealth. This is not the case in Palo Alto, where you would be lucky to find a "starter" condominium for less than a million.

If you do a web search for something like "cost of living zip code" you can find a calculator to compare Palo Alto with other areas. Even if the local salaries are someone inflated, they are by no means sufficiently enlarged to compensate for the differential in home prices, etc.

So, while many, perhaps even most, Palo Altans will find that the new tax laws are not to their detriment, but rather to their benefit, this is certainly not true for everyone.

Of course, those of us who have owned property for more than a few years, have likely seen great "appreciation", but it's only on paper. It doesn't impact our lives in any tangible way. It's not like we can spend the "equity" to pay our increased taxes.

And surely, there are many individuals, couples, and families, who have been working hard and saving money, and only a few weeks realistically aspired to purchase a home, but now find their hopes dashed by the new caps on deductions for state tax + property tax + mortgage interest.

BTW, the news cap are *not* indexed for inflation, meaning they will become less and less valuable in terms of real money over time.

For me, this is sad turnabout and nothing to celebrate.

Sad, some other high tax states rushed to allow for 2018 to be pre-paid. Why not California?

Not too late to move to Nevada (or Texas or Florida). No income taxes there. Over two-hundred thousand people have done so since Brown became governor...they took over 7 billion dollars with them!. I think we are about to witness a tsunami of exits to other states (at least to set up a primary residence). An obvious example would be to move to the Nevada side of Stateline in Tahoe, if one happens to live on the CA side.

Palo Alto is well known for its liberal/leftist politics, so why are there complaints from Palo Altans? We are simply paying for the taxes we imposed on ourselves, without being subsidized by people from outside this state.

And it should be noted that this will undoubtedly drive property values in CA down so someone who is “House poor” and may have been pulling cash from their property appreciation over the years may now find themselves underwater and could only sell their home at a loss...

"Over two-hundred thousand people have done so since Brown became governor..."

You're kidding, right?

CA population has risen from 37 million to 39.25 million since 2011. What an absurd, perfidious statement, using 200k ex-pats vs a rise of 2+ MILLION.

"... so why are there complaints from Palo Altans?"


Answer: Trump lied when he told us he would cut taxes for the middle class and not the uber wealthy.

Question: why aren't you complaining about how he lied to you and the rest of the American middle class?



Trump: “Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected. They can call me all they want. It’s not going to help. I’m doing the right thing, and it’s not good for me. Believe me.”

Did you hear what he told his wealthy patrons at his golf course this weekend?

"You all just got a lot richer"

CBS NEWS December 23, 2017, 11:36 PM - "You all just got a lot richer," Trump tells friends, referencing tax overhaul

You can pre-pay all the California income tax that you want, twenty years ahead if desired. Form 540 calls it "Overpaid Tax", which can be carried forward as future years' estimated-tax payment (line 95 on last year's 540). But you get a following-year 1099-G showing the carryforward as taxable income, which of course was then deductible as an estimated state income tax payment. (You are effectively giving an interest-free loan to the state, passing up the maybe 0.6% after-tax yield you'd get if your money were in a savings account.)

I've carried forward a five-figure sum for several years, anticipating a moderately large capital gain from stocks held over a decade. I took the gain this year, so my carryforward will evaporate before it becomes non-deductible under the new tax code. The carryforward tactic is no longer tenable, as the IRS will tax the amount again and again each time you carry it forward. No more interest-free loans to the state, since such loans are now subject to a minus-28% annual fee. Horrors, do I understand this correctly? Not taking any chances...

Regarding moving to a no-income-tax state, I may need to look into that before eventually cleaning out my 401(k) pre-tax dollars. Could I move back to California again later without a repatriation tax?

Also need to re-think my annual charitable contributions if I'm no longer getting the Federal match.

Not that I'm judging the new tax code, merely adjusting. As Claude Raines said in Casablanca, "Personally, Major, I will take what comes."

All the analysis I have seen is that the vast majority of California residents will pay less under the new tax law. In particular, poorer people with children will greatly benefit from the increased standard deduction and increased child allowance. High salaried people with large mortgages and high property taxes are the main losers.

"Not too late to move to Nevada (or Texas or Florida)."

OK, bye.

"We are simply paying for the taxes we imposed on ourselves, without being subsidized by people from outside this state."

The new law will double-tax us on some of our income. We were promised a tax cut. Get the distinction?

As for "being subsidized by people from outside this state.", California and other Blue States have subsidized the Reddest of the Red States for a long time. See the link on Stephen's post of Dec 23, 2017 at 10:42 am above. Now they have gotten seriously greedy.

In terms of the house.

I believe mortgage interest levels are grandfathered, if so get what you have into a 1st before January 1.
Consider renting out your house instead of living in it, so you can still write off prop tax and mortgage.
Create a corporation to own your house.
If you still have to sell look into "like kind exchanges" which I believe still cover your situation.

These are just ideas for you to consider I dont know if they work.

Talk to a professional and not "town square".

Good Luck.

@musical, California in the past has asserted the 401k/IRA money earned in California is subject to California Tax when withdrawn independent of what place you move to. I dont know how successful California has been at enforcing that assertion.

@idea...
FTB Pub 1005 says "California does not impose tax on retirement income received by a nonresident after December 31, 1995"; specifically no tax on 401/403 plans or IRAs. Nonresidency "guidelines" are in Pub 1031 section G, notably location of principal residence, bank/brokerage accounts, car registration, driver license, voter registration, and similar factors. Probably safest not to set foot in the state for the entire calendar year and have that notarized.

I don't understand all the whining about blue states (rich states) paying more to the red states (poor states). Isn't this what the liberals support (rich to poor transfers)? Now is the time to pay up.

Let's be honest here - the new tax plan was very much about satisfying the Kochs' and their friends' (e.g. the deVos and Scaife families - see the book "Dark Money") desire to trim or eliminate as much as possible government support for the social safety net, although it is hard to imagine what they could possibly do with more money. The flip side, e.g., elimination of SALT, was done to keep the total increase in debt under the $1.5T limit so that they could pass the bill with their paper-thin Senate majority,.By targeting as much as possible increased taxes on folks like many of us Palo Alto residents, the GOP doesn't risk alienating their support. Note that provisions for carried interest, oil depletion allowances etc. all remain. Indeed, as Nancy points out, the GOP can say that blue states subsidizing poorer red states through their taxes is entirely consistent with the liberal view of how things work. Or, even that since the loss of SALT will cause increased taxes on the prosperous upper middle class, it is a progressive change in the tax code. As Oliver North might say, that's "nifty"!

"I don't understand all the whining about blue states (rich states) paying more to the red states (poor states). Isn't this what the liberals support (rich to poor transfers)?"

Vintage snarkasm, but it's about big irony, Ma'am.

Red-State Conservatives fancy themselves the bulwarks of good ol' American self-reliance and the supreme enemies of socialism and government handouts. Their well-documented dependence on welfare money from those tax and spend liberals is therefore highly ironic and more than slightly amusing.

But do they complain about this government largess, or--their favorite prescription for other underachievers--try to better their lot by working harder, so they can match the fiscal productivity of those liberal Blue States? Not that I'm aware of. You?

The plain answer to Nancy's lament is the blue states are the winners in the open market, the red states are the losers. The government redistributes the wealth.

The discussion about Blue State to Red State subsidy misses the reasons this subsidy occurs. The"subsidy" primarily is welfare state transfers to poorer individuals from richer individuals - regardless of which state they reside in. (Florida is one of the biggest recipients of subsidy because of the large number of Social Security recipients. California residents on average subsidize a lot of poorer residents here and in other states because we have a lot of high income people.) It is ironic that blue state residents are stronger supporters of the welfare state and its income transfers, while red state residents are more critical of it when the money flows from blue to red.

One way to get rid of the Blue State subsidy would be to end the welfare state. How many people here who are upset about the transfers to poor individuals in red states want to end Social Security, Medicare and Food Stamps?

"How many people here who are upset about the transfers to poor individuals in red states want to end Social Security, Medicare and Food Stamps?"

Who's upset? I'm laughing with extreme glee as I tweak the intellectual noses of the Red State conservatives about their dependence on subsidies from the Blue State liberal elites they deplore. Isn't that worth a few bucks?

Web Link

For those worried about the tax bill (as I was), I encourage you to try this online calculator. While the SALT deductions are capped at $10,000, there are several advantages to the bill that offset that pain.

First, the AMT threshold was significantly increased, meaning fewer taxpayers will get hit by it. This matters, because SALT deductions are eliminated under the AMT. For example, my $35k in state income tax and property tax over the past few years were eliminated under the AMT calculation, meaning I couldn’t effectively deduct them anyway. Now, I don’t get hit by the AMT and thus can claim a $10k deduction. This is a win for me.

Second, the income phase outs for the child tax credit increased to about $400k per year, and the amount of the credit doubled. For the past 13 years, I was never able to claim the child tax credit for my 2 kids due to the previous threshold. Now, I can claim a $4k credit for my two kids.

Third, the rates within the brackets lowered.

At the end of the day, I was surprised to see my tax liability actually DECREASE by $7,000.

I ran the calcs, and it looks like our taxes will be ~$4K higher next year thanks largely to the capping of SALT at $10K. This is probably an overestimate as we'll prepay the 2nd 2017-18 property tax installment before Dec 31.

I see comments about the elimination of SS and Medicare. In case you do not know SS is deducted from you paycheck as FICA up to a limit and it is matched by your company. SO both the individual and company are paying this in. That applies to people who have SSN numbers and are citizens. The H1B people are not on the company payroll, they are a subcontract line item and actually work for a company who does nothing but bring in and move these people around. The argument companies make is not about talent it is about the saving in payroll taxes that also apply at the state level as SDI. So all of your local multi-millionaires are raking in the money and using tax loopholes for tax payment avoidance.

Tax Lawyer and thanks tax lawyer provide a perfect example of the problems with this terribly misguided tax "reform".

Tax Lawyer has a sufficiently high income to be subject to the AMT in previous years. The AMT was designed to prevent wealthy taxpayers from using loopholes to avoid paying taxes. With the new law, Tax Lawyer will no longer be subject to the AMT and will pay *less* in taxes.

thanks tax lawyer has a more modest income which would not be subject to the AMT, but would allow full deduction of state income and property taxes (SALT). With the new $10K cap on SALT deductions, thanks tax lawyer will no longer be able to deduct the full amount and will pay *more* in taxes.

Lower taxes for the wealthy, higher taxes for the middle class.

"Lower taxes for the wealthy, higher taxes for the middle class."

Some sacrifices are necessary in order to avoid unduly increasing the national debt. There being many many more Americans in the middle class than in the wealthy class, it is logically their duty to bear the major sacrifices.

First of all, this year's taxes are not effected by the new Trump federal tax law. Any increase that you've noticed up to this point have NOTHING to do with the recent federal tax law.

Secondly, the new tax law will lower taxes for the overwhelming majority of Americans. One analyst states that taxes are lowered for more than 90% of Americans. Most critics reluctantly admit that federal taxes will be lower for well above 85% of low and middle class families.

While corporations and upper income families might also enjoy tax cuts, it doesn't mean that everyone else is paying the difference. That isn't true. Rather, most people are getting a DECREASE in their tax bill.

Personally, I am ecstatic because our federal taxes are not only going down, but the Obamacare individual mandate tax penalty was also repealed. That hit us exceptionally hard at a time that when we couldn't afford insurance. Of course, we haven't gone to the doctor in several years and, when we did, it cost more for basic services anyway (thanks to the unsustainable Obamacare rules).

"While corporations and upper income families *might* also enjoy tax cuts"

Such an absurd statement like this completely repudiate any of your other opinions and claims. Corporations and the wealthy 'enjoy' that vast majority of this bill's benefits.

Also this claim: you couldn't afford medical insurance and couldn't get Medi-Cal *or* Obamacare subsidies to afford insurance, therefore you paid penalties for not getting insurance.

Politfact: "About 20 million people gained coverage and about 14.5 million of those were under Medicaid or CHIP"

Yet you somehow didn't, and paid fines? [Portion removed.]



Trump to his wealthy patrons: "You all just got a lot richer"

CBS NEWS December 23, 2017, 11:36 PM - "You all just got a lot richer," Trump tells friends, referencing tax overhaul

"First of all, this year's taxes are not effected by the new Trump federal tax law. Any increase that you've noticed up to this point have NOTHING to do with the recent federal tax law."

So what? We're talking about taxes under the NEW law here.

BTW, have you tried to actually estimate your 2018 tax bite, or are you--as your posting indicates--naively trusting media pundits?

I previewed mine. They're going up. No surprise to me, tho. I never swallow Trump's or the Republicans' FoolAid.

And if you're voluntarily foregoing medical insurance, do have the courage of your convictions and don't be a charity case at the ER when you get sick or injured. That's socialism, you know. Show the true grit. Pay your own bills like a proper conservative.

@ "Fiscal Conservative Family:" [Portion removed.] I suspect that the number of Americans who paid the Obamacare tax fine -- numbering in the millions -- did so because we just didn't want insurance that Obama's law mandated we purchase. Do you REALLY believe that?

Like many of them, our household fell between the cracks in Obamacare. We were forced to buy insurance that we probably weren't going to use (and didn't need) because (even with a partial subsidy) we couldn't afford to buy insurance.

Now, please let me know a source for how people who "gained insurance" from Obamacare are suddenly going to go without because of a repeal of the individual mandate.

As for who gets a "majority" of the cuts: Who cares? You're relying on Simpson's Paradox figuring to help validate a "Trump's tax cuts are bad" narrative. The point is that most people will be getting a cut. MOST of those are low and middle income. Of course, this will be apparent by next year. When people are keeping more of their wages and salaries, they will know it.

The effect on next year's charitable contributions will be telling. Not looking forward to the bombardment of more aggressive solicitations I am likely to receive in the mail. Good excuse to cut off some of my traditional annual giving to organizations that I'm no longer enthused about, even though I'll still be itemizing. I wonder whether the mendicants downtown will become more persistent as their other sources of support are cut back.

I was forced to buy healthcare through work over the course of 3 years. Never visited the doctor once. That's thousands of dollars down the drain. Forgive me for being young and healthy.
I guess I had to "pay into the system" to support an obese person's Vicodin prescription. Because of our "shared individual responsibility"... whatever that means. And I was once a huge Obama fan. Voted for him twice. Then he goes and negotiates with an oppressive Iranian regime that wants to nuke Israel, but Trump talking to Putin to avoid war with Russia is a "conspiracy" that requires an appointment of a tax-guzzling special prosecutor over an intangible collusion charge to make liberals feel about losing the election. Sorry for going on a tangent.

The government is in the process of designing the total budget for the country. That is at the top level. Yes - reduce corporate taxes so that they can hire more and grow. That is more people employed. If you look at the stock indexes no company can stay static or the shareholders will bail out of the company. There are many components of the total tax plan and no one in DC was thinking up how to screw Palo Alto. There are a lot of weird infrastructure items from 2017 that were not planned on. And your Gov Brown wants the feds to pay up instead of him working to manage the perps of the fires - the utilities. So much went wrong including flooding in the San Jose area and potential flooding due to poor maintenance. We allowed many of the problems that occurred and it will cost money to fix. That is money in excess of any standard budget that was designed in 2016.

Consider yourself fortunate that you had health insurance and didn't use it. My 25 y.o. healthy brother was recently mugged and stabbed. Fortunately he survived, and also fortunately he had health insurance. His 20% co-pay was $15K. A previously healthy coworker went for her first mammogram at 40 and discovered that she had stage 3B breast cancer. She's now in remission after extensive (and expensive) treatment. Fortunately, like you, she had health insurance through work. It had a yearly maximum deductible of $5K. Otherwise, she would faced bankruptcy. IMO it's insane not to have health insurance as you never know what will happen.

"Yes - reduce corporate taxes so that they can hire more and grow. That is more people employed."

The word on the Street is they are investing their saved taxes in new robots so they can reduce their workforces.


"I was forced to buy healthcare through work over the course of 3 years. Never visited the doctor once. That's thousands of dollars down the drain. Forgive me for being young and healthy. I guess I had to "pay into the system" to support an obese person's Vicodin prescription."

Gee, tough luck there. My payments saved the life of a little girl's mother who's car was T-boned by an uninsured driver.

Personally, I prefer to get what I pay for. Nothing wrong with visiting the doc for a checkup every year. And there's always that unexpected injury.

I started to write a rebuttal to some of the people whose posts above espouse the Republican gospel regarding the Affordable Care Act and the Tax Bill, but I changed my mind.

Obviously, it would have been a waste of my time. Sure, I could provide many web links for sources which are highly-esteemed around the world, but would be dismissed as "fake" by Trump supporters here at home.

And while the GOP acolytes may consider the opinions of Fox commentators to be "proof", that doesn't change the fact -- yes, fact -- that the current administration and legislature failed to find a single independent, respected economist -- of any political persuasion -- to back their claims.

I close this year confident that the pendulum will swing, and in time, sanity will be restored to our government. I take no pleasure, however, in this knowledge, because so many will suffer until that time comes.

"...many will suffer until that time comes."

Especially the naive majority of Trumpistas. The savvy ones in the 1% will do just fine.

@ Abitarian: "a single independent, respected economist".

Try Paul Krugman his analysis has proven to be correct, right?

"Try Paul Krugman his analysis has proven to be correct, right?"

You refer to this analysis, right? Web Link Title: "Trickle Down? Not Now and Not for a While at Best(Wonkish)

@ Curmudgeon: Actually I was referring to "It really does look like 'President Donald Trump' and markets are plunging. If the question is when markets will recover, a first-pass answer is 'never'" ... (Paul Krugman, after Trump's election)

2017 was not a good year for Mr. Krugman. I don't think 2018 will be good for him either. It won't be good for many Californians, unless we lighten our overbearing tax load.

Krugman apparently believed Trump's promise to drain The Swamp, which would have killed Wall Street if carried out. But The Swamp is doing quite well under Trump, thank you, and so is the market.

Do you suppose Trump will get around to draining it? Or did you, like me, recognize that Trump was merely lying again?

Nice try Curmudgeon, but it has little to do with promises of draining the swamp. The market surge is a reaction to Trump's deregulation and his tax relief. We badly need tax relief in California, too.

Nancy --

This discussion concerns the new tax law, specifically, where I wrote:

"And while the GOP acolytes may consider the opinions of Fox commentators to be 'proof', that doesn't change the fact -- yes, fact -- that the current administration and legislature failed to find a single independent, respected economist -- of any political persuasion -- to back their claims."

Your response cited NY Times columnist Paul Krugman, who, as a Nobel Prize winner, is certainly a distinguished economist. The Curmudgeon, however, posted a link showing that Dr. Krugman, in fact, does *not* back the Republican assertions.

Thanks, Curmudgeon, but Paul Krugman makes this point even more plainly in his column titled "The Biggest Tax Scam In History", see Web Link

Clearly, Mr. Krugman opposes the new tax law, but let's take it one step further. I Googled "do economists support tax bill".

Rather than provide a source that GOP loyalists might quickly dismiss as the "liberal media" or "fake news", consider a piece published by Forbes, see Web Link

Forbes is moderately conservative, but not extremely so. It is definitely pro-business and pro-growth; their motto is "The Capitalist Tool". The Editor, Steve Forbes, twice campaigned for the Republican presidential nomination and has supported other Republicans including Ron Paul, Rudy Giuliani, and John McCain. Mr. Forbes frequently comments on Fox.

OK, the main points from the Forbes article -- which includes links to other sources -- are that:

1. The GOP's hand-picked list of 137 "economists" who support the tax law is fraudulent. Many of the names listed are not economists, are unknown to the organizations they claim to represent, are paid to lobby for tax cuts supporting corporations and rich people, etc.

2. Among a panel of 38 experts assembled by the University of Chicago, not one economist agreed that the tax bill would achieve the objectives its proponents claim.* The University of Chicago is one of the world's premier economic centers. The panel, consisting only of senior faculty at elite universities, included older and younger Republicans, Democrats, and Independents, from a diverse geography.

* One economist initially agreed, but later said he had misunderstood the question, and did, in fact, disagree, making the opposition unanimous.

Let's face it, the tax bill was passed to support Republican political aspirations, not to achieve prosperity for Americans across the socioeconomic spectrum.

Some Republicans were particularly candid.

GOP Senator Lindsey Graham of South Carolina stated "Republicans are literally out here warning each other that their big donors will stop writing checks if they don't do their bidding."

GOP Representative Chris Collins from New York said "My donors are basically saying, 'Get it done or don't ever call me again.'"

It would be easy to provide a basic economic and history tutorial showing why the Republican claims are false. But only on sincere request. Otherwise, my plan is to avoid Town Square in this new year.

"Nice try Curmudgeon, but it has little to do with promises of draining the swamp."

True, because Trump had no intention to keep that promise. So we agree. Actually draining The Swamp would have cost Trump his support in the K-Street and Wall Street elites and dropped the Dow into the double digits.


"The market surge is a reaction to Trump's deregulation... ."

Deregulation, like allowing Big Coal to poison the water people drink, is a relatively minor factor, although it does allow mine operators to avoid spending money on public health mitigations that yield them no direct profits. So let those folks downstream drink acid.

Remarkably, many of those hapless acid guzzlers are in Trump's Base. Go figure.

The market surge has been going on since 2009, when Obama took over to recover from the Bush Great Recession, the worst economic calamity since the Republican Great Depression of 1929.

This is not rocket science. California is overtaxed. We need to take care of our own affairs, before we start complaining about Trump. Lower our taxes, NOW! There are so many areas where we can cut our expenditures and taxes. Let's just get on with it.

I wish people would stop thinking they have some great insight into what Trump is thinking and planning. Like you have a weegee board. Sorry not creditable. Agree with Nancy - our problem is this state and our governor and two senators who spend all of their time "resisting" instead of doing anything worthwhile. And we pay these people to sit around and resist. We need to cut our taxes and eliminate the duplication of functions. That is what Trump is doing. And Brown needs to pay attention to fixing this states problems instead of procrastinating by going off to Paris to talk about carbon. We just produced a huge amount of carbon with the fires. He cannot deal with the state as it is now.

"I wish people would stop thinking they have some great insight into what Trump is thinking and planning."

A random process, such as what Trump is thinking and planning, offers little opportunity for insight. What useful thing can one learn from somebody who can drive a multi-million dollar enterprise from inception to bankruptcy in a few months, again and again, except never to let that guy touch anything of yours?

What to do? First, don't panic and allow Repubs to trash California. Work for a national Democratic landslide in November to toss out the Trump sycophants and restore sanity to the American government.

"We badly need tax relief in California"

Easy to say, but goodies like roads and prisons aren't bestowed gratis on us by fairy godmothers. And, unlike the federal government which can--and does--blithely run up huge party-now-pay-later debts for our presumably more fiscally disciplined grandchildren to deal with, the state must balance its budget.

Well, we could just empty out San Quentin and Folsom and Tehachapi and Soledad and Pelican Bay and ... and party gaily with our new neighbors if that's what you want.

Whenever a discussion of taxes comes up we hear a lot about the disproportionate amount of federal taxes paid by blue states compared to the benefits received by red states, but we never hear about what this blue state has taken from the red states and the rest of the nation.

The silicon valley business model explained in 15 seconds:

1. Eliminate as many jobs as possible by developing and marketing automation.
2. Export any jobs that can't be easily automated to low-wage nations.
3. Import workers from low-wage nations to suppress wages for all of the jobs that can't be easily exported.

Pretend it is all about inclusion and diversity. If anyone challenges the model, call them a "raciss".

In the SJM today Kevin de Leon makes the case for undocumented workers and then makes statements concerning how much taxes they have paid in but do not get in return. Let's talk facts:
1. Social Security is reflected in your yearly W form as FICA/Social Security and there is also a state SDI. You have paid that in against your social security number. And your company is matching the FICA - that is a cost of doing business. And there is an auditing staff who makes sure that happens - also a cost of doing business.
2. People receive each year a statement as to how much has accumulated against their SSN. At retirement this accumulated amount helps determine how much you get in retirement from the government / SSN administration. How much you have contributed and your age determine what you get each year.
3. That raises the question as to Mr. De Leon's statements - if money was deducted from people who are undocumented where did it go? Who is auditing all of this? Is the company matching the deductions as required? Is there some mystery vault where all of these undocumented funds go to?
4. Time for an audit by the GAO and government as how people get SSN's in this world of his. Does he have a paper printing machine that creates fake SSN's?
5. If the California world is based on fake data then the powers that be have allowed this. And people who have run major businesses totally understand how the ssystem is suppose to work. We need a auditing staff to go in and audit this activity and figure out who is the perp in pushing this type activity.
6. This assumes that a lot of D's work for the government who runs a different system and are oblivious to how things work in accounting world.

"We need a auditing staff to...."

These people are paid "under the table". I have more than a few friends (engineers) who claim they get paid this way.

Web Link

Mike - people wonder about the how and whys of the stupidity of this state. Today in the papers a big discussion about the H1B visas. The people do not work directly for the company - they directly work for a facilitator company that subcontracts the people to Google, FB, etc. So they are not on the company books as actual employees which require SSN's, W forms and withholding of FICA/SDI and therefore no matching funds. And that reduces the number of people in the payroll accounting department who have to manage this whole activity subject to both internal and external audit. That is a giant savings to the company. So any comments about technology are totally bogus - it is all about the savings in payroll taxes and reporting of same to the government - both at the state and federal level. If reporters do not understand this and ask the right questions then they need to get briefed on the cost of employees taxes, including insurance. And since the NYT is on the stock exchange they are a corporation and they do pay their taxes. Bottom line is that the corporations of the US are carrying the SSN burden and the government employees are the users of that tax benefit.

CA assembly is considering making allowing residents to make tax-deductible contributions in lieu of income taxes. An alternative also being considered by CA and other high-tax states is to eliminate state tax and replace with a payroll tax:
Web Link

One logical conclusion of this thread is to declare the IRS as a charitable foundation (the "Blue State to Red State subsidy" argument) and deduct our Federal taxes from our income before figuring our payments to Sacramento. Sounds fair to me.

"...if money was deducted from people who are undocumented where did it go? ... Is there some mystery vault where all of these undocumented funds go to?"

Your FICA account could be part of that vault if some undocumented used your SSN. Check your FICA account contributions total against the sum of your annual W-2s. You might be benefiting from this dodge. Maybe those undocumenteds ain't so bad after all.


"So they are not on the company books as actual employees which require SSN's, W forms and withholding of FICA/SDI and therefore no matching funds. And that reduces the number of people in the payroll accounting department who have to manage this whole activity...That is a giant savings to the company."

Yeah, but what happens if the company tries to claim those sub rosa wages as business expenses at tax time? Is it giving up a major deduction against its own tax burden?

If you max out your FICA account, then anyone else's contributions to it would be refundable.

@ Curmudgeon:

"Well, we could just empty out San Quentin...."

No need to empty it out completely, sentences could be very reasonable reduced, because convicts age out of crime at a certain age. No need for life sentences, period. Just execute the murderers...the rest can be released when they are old enough. Probably be able to cut the prison population by 40-60% overnight.

Repeal CEQA...a hugely costly boondoggle which primarily serves to reduce the building of moderately priced housing. CEQA is sand in the gears of progress. Environmental regs should be focused on reasonably clean air and water. Completely eliminate absurdities like sustainability bureaucrats.

Abandon the state departments dedicated to education reforms and mandates...just hand out vouchers to the parents, and let them find their choice of schools for their kids. Save a ton of money!

Nix the high speed rail and other boutique projects that are unnecessary.

There are just so many ways to get our state and local spending under control...and the sky will not fall. Trump blame is a diversion. The real problem is us!

"There are just so many ways to get our state and local spending under control..."

It's under control right now. Jerry has balanced the state budget, which we cannot say for Trump re the fed budget. The last federal balanced budget occurred on Hillary's husband's watch.

The simple fix here is to rationalize the Trump Tax law. Gotta get a veto-proof Dem majority into congress this year.


"Trump blame is a diversion. The real problem is us!"

Trump blame falls on everyone who voted for Trump. That's not us Californians.

Posted by Mike; a resident of University South, wrote:

>> These people are paid "under the table".

No doubt large numbers of marginal workers are paid this way, not particularly by their own choice. Most of them would love to get paid a regular hourly wage including Social Security, Medicare, Disability, and employer-sponsored group health insurance. But, at best, they are, as they say, "1099'ed".

>> I have more than a few friends (engineers) who claim they get paid this way.

Engineers getting paid real money under the table? Sounds like Income Tax Evasion to me. What Al Capone went to prison for. YMMV. But hey, -I'm not a lawyer and don't pretend to be one-.

Major companies on the stock exchange are subject to strict accounting rules regarding the reporting of any tax issues. In today's papers story of how Google is hiding money off-shore and now all of the countries are trying to get a tax payment. That whole scenario is getting turned around - somewhat.
As to H1B personnel - they are a "subcontract" on the books. Large companies have many subcontractors who have to report as a unique business. Build a F-35 and you have a lot of subcontractors - all separate businesses. Look at the yearly corporate reporting if you are a share-holder to understand basic bookkeeping rules.
We all understand that some people on this thread are die heart D's and need to turn any conversation into a D rant against Trump. However we are trying to talk about accounting principles now and understand the how's and why's some issues get contorted or hidden. Undocumented people paying into a system is a contortion that is benefitting the owner of a business. Turning tax payments into a charitable contribution is a contortion of all of the previous propositions we have voted on which result in additional tax payments - including the recent gas tax. Look at your property tax - there is a listing of the deductions we have voted on which include the school system.
We seem to have a crew of people in the legislator who have taken over with no vote from the citizens. Worry about that. Take that down to the city level to look at how many people are needed to screw in a light bulb and how many subcontractors we have - street cleaners for one. Use of subcontractors reduces the need for city staff and their resultant pensions which are a topic on another thread.

A couple of comments about the original post:

>> Suddenly, without warning,

Republicans were talking about eliminating the state and local tax deduction back in 2014:

Web Link

As for (I'm paraphrasing, not quoting anyone) "unintended consequences", they were exactly what was intended:

Web Link

@ Anon,

"“They go after state and local taxes, which weakens public employee unions,” (Stephen Moore).

Now I like this plan even more...public unions should not be allowed (which was FDR's position). Handing over monopoly control over an essential public service is crazy!

"Now I like this plan even more...public unions should not be allowed (which was FDR's position)."

What about this MAGA thing? America was great in the forties, fifties, sixties, and seventies, when taxes on wealth were high and unions were strong and Wall Street was weak. America declined in the eighties as Reagan reduced both wealth taxes and unions and elevated Wall Street.

You may be a fan of FDR--fine--but his failure to carry out his anti-union position helped enable postwar American greatness. Workers need to unite to effectively confront big government.

Posted by Nancy, a resident of Midtown:

>> Now I like this plan even more...public unions should not be allowed (which was FDR's position). Handing over monopoly control over an essential public service is crazy!

Well, at least one Californian is happy with the new tax law. And, they said it couldn't be done. I'm confused about this item in particular, though-- folks with your political orientation usually hate "taxes on taxes". The previous tax law allowed deducting these taxes to avoid "taxes on taxes", and, the new law brings back "taxes on taxes". I'm confused about how you can be reconciled to that?

@ Anon:

We have long had taxes on taxes. Look at it this way: Suppose California allowed us to deduct our federal taxes from our state taxes...few, if any, of us would pay any state taxes. Get over it and try to cut down on our state taxes, so that they are under $10k...then we can all be happy.

With CA state income taxes at 13% and the cost of PA housing (both to buy and rent) exorbitantly high, it's really difficult for an individual, let alone a couple. to keep CA state/property taxes below $10K. To do so, a couple would need to make no more than $85K and have $0 in property tax (or make slightly less than $85K and pay correspondingly more in property tax). How do you do it??

"folks with your political orientation usually hate "taxes on taxes"."

It's the latest ideological paradigm shift. The true believer Base holds to whatever immutable principle its leader du jour finds expedient at any given moment. Orwell eloquently described this phenomenon in his book 1984.

Remember when Republicans were all for Fiscal Responsibility, Family Values, and Racial Equality. Reagan indelibly erased the first and Trump thoroughly trashed the others. The Base loves the show.

For the moment, anyway. Stick around and watch.

Republicans are fun to watch. Just keep them away from the controls.

Let's try double that $85K number, $170,000 adjusted gross income on a joint return. California standard deduction is $8472, leaves California taxable income $161,528.

California income tax from 540 Schedule Y is $4753.34 plus 9.30% of amount over $107,960. That is 4753.34 + 0.093 x (161,528-107,960) = $9735.16.

Throw in the $228 exemption credit and then your total California income tax bill is $9507.

To all of you who think it is impossible to lower CA taxes: Lower our income tax rate to 10% (instead of 13%); readjust all property assessments to 1978 levels (when Prop. 13 was passed), compounded by 2% per year. Adjust spending accordingly...there are so many ways. It's not rocket science!















































5)

Current California income tax rate for joint-filing $170,000 is 5.6%.
The marginal rate for the next $380,000 is only 9.3%. Not even 10%.
The case for lower taxes is not helped by exaggeration.

(or by 48 extraneous carriage-returns -- yes, I counted)

@ Musical:

The top marginal income tax rate in CA is 13.3% Move that down to 10%, and lower the other marginal rates by the same 3.3% Reduce state spending to fit within those restraints. Not rocket science.

It is clear that "Nancy" has the Koch Brothers playbook down pat. First off, state and local taxes generally pay for the stuff that benefits us most - fire services, schools, streets, water supplies, parks, .... So, this is likely where we get our money's worth in general. For example, in California, we fund a truly excellent system of higher education, something that is a major reason California is the 6th largest economy in the world, about to surpass the UK (which has 1 1/2 times our population). In any case, in the last day or two there was a nice NYT article explaining how states like California might set about undoing the effects of this Blue to Red state redistribution. Finally, it is worth pointing out (as was done a few times here) that limiting SALT deductibility is progressive; it's just that most of the new tax bill is not progressive (indeed it is just the opposite) with the only progressive aspects being ones that specifically target places that voted strongly against Trump and the GOP.

Income tax is only half (or less) of the problem. Property tax is a big problem. (18 year homeowner, not a millionaire!). I expect PAUSD to stop stripping us clean with property tax assessments every time there's an off cycle election. Its got to stop. the school board got their massive overkill remodels at at both high schools. thats it. Enough. They're going to have to figure out how to live within their means.

There is a potential plan to allow california tax payers to donate their tax obligation to the state, use a credit resulting from the donation to offset state taxes, and then itemize that donation as a charitable contribution on their federal taxes.
It is described in this article.

Web Link

According to Anon's link, back in 2014, Republicans were considering reducing the SALT deduction to $11K for individuals and $22K for couples. That seems far more reasonable than the Draconian $10K cut-off for individuals AND couples that's part of the recently-passed tax plan. Musical's point (calculations) are well-taken, but the $10K limit still seems prohibitively low for a 2-income couple struggling to own recently purchased property in PA. It might be OK for an unmarried renter, though.

Tax the rich!

Unless we are the rich.

Then, make a loophole!

Mandatory donations to the Democratic Party...or...uh... the state government. Not taxes.

A quote from that "donation" article -- "... every dollar that somebody donates to Sacramento, that’s potentially one less dollar going to the federal government."

True only if you are in the 100% federal tax bracket (which does not exist).

And you'd also need a letter from Sacramento that you received nothing material in exchange for the donation, like say the proposed dollar-for-dollar dismissal of your obligation to pay state income tax.

@ Stephen, " state and local taxes generally pay for the stuff that benefits us most" (your words). Now, if you want to get out of a hole, the old saying is, "stop digging it deeper". So, the first step is to reject all new tax measures in CA, both at the state level and the local level. Then prioritize where current cuts will be made (e.g. high speed rail(?), colleges that do not support free speech (?), design contests for bicycle bridges (?), anaerobic digestion fiascos (?), lack of enforcement of immigration laws (?); subsidized housing (?)...and many more). It's not rocket science.

"... prioritize where current cuts will be made..."

Aim high! Save big! Cut prisons and law enforcement.

Knock our grossly bloated prison-enforcement-industrial complex down to size.

@ Jolly:
"Aim high! Save big! Cut prisons and law enforcement."

Yes, put it all in play! Squeeze tight, we are capable, as free people to decide. It's not rocket science. It's a new day!

The angst is entertaining. Frankly, we don't know how 2018 will shape up. If you were hitting AMT, you weren't able to deduct SALT anyway, so even being able to deduct 10K is an improvement.

We keep talking about income taxes, but don't forget how ridiculous our sales tax is as well. The comprehensive tax burden on Californians is crazy. And all that extra money we put into government just gives higher salaries rather than better roads and services. Just look at the mindset of elected and non-elected officials by remembering the teacher salary increase from the phantom revenues for PAUSD. Take away the fact that the money didn't exist, we should have been thinking about reducing class sizes and hiring more teachers. But there was no way the teachers union was going to allow for that. It's all about the folks who already have the teaching jobs, not about the children.

Remember that when you are knee-jerk pro-union.

As for what it might do to affordability of Palo Alto - if there are fewer folks in the market, the prices will soften, all things being equal. That being said, with Prop 13 keeping old folks in their homes, the supply won't change much.

@idea for the OP,
Thanks for the link!

@john_alderman
The cost of living is high here. People do what they can. The narrative that only millionaires live here comes from developers' framing to get exceptions for profitable high density, it isn't really true.

Web Link
Basically, this says $62k in LA is the same as $193k in Palo Alto. Or $80k in Seattle should be $234k in Palo Alto. There are many different sites with different pronouncements. Bottom line: it is expensive to live in the Bay Area, not just Palo Alto. If you are here for any length of time and you are not a one percenter, the only way to be stable is to buy.

If you think buying here is expensive, try renting during an extended boom. (Which you can expect to do a lot of since 1 year is considered a long lease.). Moving is expensive, including in ways beyond money. The only way to remain is to find a way to buy, and yes, before the rug was suddenly yanked out from under us through this sudden change in policy, it was the wisest thing to do and has been for decades. How could we have expected people who call themselves conservatives to make such sudden changes and to double tax so many millions of people?

Web Link
Lots of ordinary people try to put down roots in the Bay Area if this is where your job is. It takes time and tremendous sacrifice.

You may wish to criticize anyone who pulled themselves out of poverty or the policies they relied on. But it's wrong to keep making up false framing to ignore what has just happened to millions of families. (Many will indeed get lowered taxes, my parents who will have to help us will get $85 a year less tax.) So I have a proposal for you, john_alderman.

Let's agree on a neutral, trusted arbiter.

I will share our gross household income with that person. If it is even close to half of the lowest of the two one-percenter thresholds above, then I will publicly apologize to you and eat crow. If it is not, how about you cover the cost of an accountant? If my taxes go down under the new law, I will gladly reimburse you to the amount they go down. If they go up, how about you make the apology and pay the difference?

I don't expect you to put your money where your mouth is, but hope you will.

We are not making hundreds of thousands a year. We are not one percenters. We are not millionaires. We make less than a household of average teachers here. We have never come close to hitting AMT (looked at what it would take over the holidays.) It took decades to work toward this stability - this tax increase is devastating.

Just multiplying the increase we will be paying by the millions of people in higher cost states in similar straits makes up a lot of the savings to the wealthy. I don't see anyone looking at those numbers.

@ Original Poster, if Prop. 13 was to return to 1978 assessment levels, compounded 2% per year, would that relieve the pressure on you?

I agree this terrible. We moved from Palo Alto to El Paso Texas a few years back to save more and be able to live with less income. Cost of living is great here but we have high property taxes and will no longer be able to deduct them. Uggh!! Luckily I started a small side business [portion removed] so I'm able to deduct and offset quite a bit but these are not good times for some of my friends. This is affecting people everywhere.

Are there any hints yet as to how this is going to affect people. Are real estate sales
slowing or prices seeming to go down?

I've got to say I am getting so tired of the nasty rhetoric in these forums of name
calling if someone has a complaint or concern and people coming down on them.
What happened to the people here.

Most people who have wanted to put down roots in this area have put themselves
in a very tight squeeze initially and make huge sacrifices to do that. We all know that
life is not always fair, but that is no excuse for our own government to go out of their
way to make it unfair. And why do so many presumed Palo Altans take such glee
in twisting the knife.

Arbitrarily changing something like this at the federal level with no warning, no discussion,
no CBO analysis, not even a real bill having had parts of it written in illegible longhand,
unilaterally and with extreme partisanship that affects so many people is so much worse
than the tax reasons this country was created to fight it boggles the mind.

What is it going to take for a high-minded moral group of philosophers and the majority
of citizens sick and tired of what used to be called economic royalism to overthrow
this order of neo-aristocratic incompetence and corruption?

Trump promised to lower taxes for all working class and raise taxes on himself.

He lies.

Lied.

Waffle and change subjects

But. He. Lied.

Liar.

I assume the solution you seek is a repeal of the specific aspects of the new tax law which impact you (eliminate some of your deductions). Unfortunately, most Americans are not going to be upset if Palo Altan's can't deduct their million dollar mortgages or have incomes that create a state tax bill that is no longer fully deductible. We must be realistic. We are the richest of Americans (you must be in the top 5% to afford to live here), and the 95% of Americans below us will not feel sorry enough for us to support restoring tax deductions. This is not intended to be mean, it is simply the truth.

Astounding that most posters just ignore Trump's promises about taxes that he broke.

I'm perplexed.

Nah b

They'll bring up some Obama lie or Clinton email thing to justify Trump clearing a billion bucks in personal tax cuts even tho he "promised"

What about......??????

@Bor war

Well, he did succeed in reducing some peoples and business taxes.
Just not yours.

"He lies."

He lied about taxes and he lied about draining the swamp. Who cares except liberals?

However, he's keeping his core promise. He's deporting those brown people he promised to get rid of. His base is euphoric over it. They cheer him at his rallies. That's what matters.

From Investopedia:
"The top 5% of households earn an annual income of $214,462 or higher, according to the Census Bureau. That's nearly four times the 2015 nationwide median household income of $56,516. The average income among those in the top 5% climbed to $350,870."

So, no, not top 5% in the nation, and certainly not here.

You are also conveniently forgetting Cost of Living, which the media seem unable to even fathom, and oddly Republicans who supposedly understand supply and demand ignore when it suits the purposes of their own brand of government overreach and mean social engineering. (There is a narrative going around in red states that people are just leaving California in droves, and there is no one left to work - they really truly do not get that California is expensive because of market forces, I.e. high demand.)

This law didn't raise taxes on the top 5%, it lowered taxes on the richest and paid for a lot of it by raising taxes A LOT on people in the middle in highest COST states (highest cost because of cost of living). Where is the media in this? They seem oddly to have gone back to parroting the administration' framing.

California and other states most affected, even before the tax law, were sending net more to the federal coffers than taking, and way more than most of the states that most favor the Republicans who voted this in.

@Original Poster-- Anyone Else...
""The top 5% of households earn an annual income of $214,462 or higher..."
So, no, not top 5% in the nation, and certainly not here. "

Then you'l, have to explain to us how your taxes could possibly be going up by $10,000 to $15,000 as you atated in your posting.

Everyone is trying to help you but you just keep complaining about how your poor you are and how unfair this tax bill is to you. What income or asset do you own that is causing a $10,000 to $15,000 increase in your tax payment this year?

I call shenanigans on OP. The increase they speculate is made up to provoke discu0ssion with no basis. If you can afford to live in Palo Alto, you should be paying your fare share. Its is also really poor form to take money from your parents due to bad financial planning on your part. EVERYONE is seeing a tax decrease this year. You are welcome to verify my math with the data I have provided matching the OPs detailed financials.

[Post removed.]

As per CA FTB, OP had a valid point. Looking at Web Link page 11:

"Table 4 also shows that, taking the entire federal tax change package into account, of the
2.6 million taxpayers with more than $10,000 in SALT deductions, about 900 thousand
California taxpayers have lower federal tax liability under the new law then under the old law,
about 100 thousand California taxpayers would have approximately the same federal tax
liability, and about 1.6 million California taxpayers have an increase in federal tax liability."

Thanks, circles, for facts.

...about 1.6 million California taxpayers have an increase in federal tax liability.

151 comments - now that the FTB has answered on how many Californians are getting hosed to pay for tac cuts for billionaires and CEO's of large corporations and their buybacks, we can eliminate 3/4's of these useless comments.

Trump & the GOP screwed the middle class to save his family 100's of millions if not billions (estate tax giveaway); he particularly laid it on Californians.

Good for this new tax law !
The bay area in particular has the highest property values and salaries in the nation. I'm glad to see the taxes for the rich Californians increased like this. If you want to raise taxes on the rich, then just look in the mirror and see who's taxes are going up. YOU are the rich!

ASG of Professorville...
what is the average home value in your area these days ? Last I checked it was over $8M. What exactly are you complaining about ?
The average in Barron Park is only about $3M so I'm poor compared to you. I would like to see your taxes go up and mine go down because I'm relatively poor - certainly closer to "middle class" than those of you in Proffessorville are.
It is comical to see Palo Alto residents complain about tax increases as if they are poor. Palo Alto residents are in the top 5% if the nation. Most are in the top 2%.
There it is proof that the new tax law works - it is taxing the rich!

There are 40 million people in California.1.6 million will pay more federal taxes.

"The bay area in particular has the highest property values and salaries in the nation. I'm glad to see the taxes for the rich Californians increased like this. If you want to raise taxes on the rich, then just look in the mirror and see who's taxes are going up. YOU are the rich!"

Million$ in one's house is not million$ in one's pocket. That's why we did Proposition 13, remember? To keep our house- "rich" seniors on fixed incomes from losing their "expensive" houses, right?

So enjoy whatever few tax dollars you might save before you have to spend them to pay Trump's new tariffs, and be sure to write a Thank You note to the grandkids who'll be paying them off as part of their national debt inheritance.

Circles, According to Table 5 on p. 12 of the link you give, the vast preponderance of CA taxpayers who will see an increase in their taxes earn $100-$249K; those higher-earning taxpayers will typically see a decrease in their taxes (presumably due to the eliminating of AMT). Although a $100-$249K salary would make one rich in most red states, it's (upper) middle class for a high-cost area like Palo Alto. That's why folks her are complaining.

@Curmudgeon
You misunderstand. Prop 13 is intact. Us old folks are fine.
This thread was started by OP whose taxes are going up by 10 to 15 THOUSAND Dollars.
With a combined federal and state tax rate of 35%, the lost of a deduction they were claiming last year of 29 to 43 thousand dollars. That’s an awful big deduction to be able to claim if your poor. OP won’t tell anyone what the deduction they lost is, but it’s seems implied it is ihe loss of SALT deduction. So they still get 10k they can deduct. So 10 deductible plus 29 to 43 k Yieds a 40 to 53 k deduction they are trying to claim for that Schedule A line item alone. Do you you really want people with an income that Generates that magnitude of SALT to be your poster child for the poor?

Of course OP says they went to their parents for the money anyway, so I guess us old folks are paying for it anyway

"You misunderstand. Prop 13 is intact. Us old folks are fine. ... Do you you really want people with an income that Generates that magnitude of SALT to be your poster child for the poor?"

What do the poor got to do with P13 and taxes going up? Would you mind trying to straighten out your logic while I go find my dramamine?